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Top Trades for Fri, 20 Feb 2015 12:26

Mario Gabelli on CNBC saying he doesn't understand why GOGO is moving up.  I agree.  

GOGO/8800 – As I said, they have 80% of US flights under contract through 2020 so, even if T does come up with something better (they have nothing now, just talk) and convinces carriers to switch in droves – it will be a long time before it hurts GOGO.  Also, while I can get on a plane and not have wifi – my kids consider it torture and, for now, they don't make that decision so they suffer but, as those kids get older – I think there will be more and more GOGO customers every year.  Even I do it once in a while – when I have a business reason.  Apparently though, 1/3 of the people on the plane are already doing it and, if I were the airline (who get a cut), I'd start making it an add-on choice people can make with their tickets.  

Don't forget, T also said we'd have video phones 20 years ago and they said we'd all have high-speed fiber and they said we'd have better cell-phone reception and they said they'd lower the bills if we stop net neutrality, etc. etc….

2014-06-13-attpromise.png

As it turned out, T gave up on their idea for competing with GOGO because GOGO has locked up too many contracts for it to be worthwhile.  We had sold 10 of the Feb $17 puts for $2.20 in the old Income Portfolio on 9/17 for a $14.80 net entry and today they are at $16.26 so closing around 0.75 for a 65% gain is not bad and I think our $15 floor target was a good one.  

So, for the LTP, let's sell 10 2017 $15 puts for $4.40 and buy the $20/25 bull call spread for $1.20 so we still have a net $3.20 credit for a net $11.80 entry (worst case) on 1,000 shares with the upside of $8,200 at $25. 

 


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